HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.</li>
<li>We see attractive stories for <a href="https://www.smartkarma.com/entities/shanxi-xinghuacun-fen-wine-factory-co" target="_blank" data-smartkarma-citation="entities:9288:1" rel="noopener">Shanxi Xinghuacun Fen Wine (600809 CH)</a>, <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring (603288 CH)</a>, <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial (600887 CH)</a> and <a href="https://www.smartkarma.com/entities/fu-jian-anjoy-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Fu Jian Anjoy Foods (603345 CH)</a>.  </li>
<li>While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  </li>
</ul>


Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.
We see attractive stories for Shanxi Xinghuacun Fen Wine (600809 CH), Foshan Haitian Flavouring (603288 CH), Inner Mongolia Yili Industrial (600887 CH) and Fu Jian Anjoy Foods (603345 CH).  
While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  


China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Anjoy Foods Group   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anjoy-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Anjoy Foods Group (603345 CH)</a>, a quick-frozen food company in China, aims to raise around US$300m in its H-share listing.</li>
<li>AFG was the largest quick-frozen food company in China in terms of revenue in 2023, with a market share of 6.2%, according to the Frost &amp; Sullivan report.</li>
<li>We have looked at the company’s past performance in our earlier note. In this note, we talk about the PHIP updates and provide our thoughts on the A/H premium.</li>
</ul>



Anjoy Foods Group (603345 CH), a quick-frozen food company in China, aims to raise around US$300m in its H-share listing.
AFG was the largest quick-frozen food company in China in terms of revenue in 2023, with a market share of 6.2%, according to the Frost &amp; Sullivan report.
We have looked at the company’s past performance in our earlier note. In this note, we talk about the PHIP updates and provide our thoughts on the A/H premium.


Anjoy Foods Group A/H Listing - PHIP Updates and Thoughts on A/H Premium

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anjoy-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Anjoy Foods Group (603345 CH)</a>, a quick-frozen food company in China, aims to raise around US$300m in its H-share listing.</li>
<li>AFG was the largest quick-frozen food company in China in terms of revenue in 2023, with a market share of 6.2%, according to the Frost &amp; Sullivan report. </li>
<li>In this note, we look at its past performance and other deal dynamics that might impact the listing.</li>
</ul>



Anjoy Foods Group (603345 CH), a quick-frozen food company in China, aims to raise around US$300m in its H-share listing.
AFG was the largest quick-frozen food company in China in terms of revenue in 2023, with a market share of 6.2%, according to the Frost &amp; Sullivan report. 
In this note, we look at its past performance and other deal dynamics that might impact the listing.


Anjoy Foods Group A/H Listing - A Leader in a Fragmented Industry

<ul>
<li>The 6 H-share IPOs of the listed A-share companies YTD have seen their H-A discount narrowing from an average of 31% during IPO to 15.5% currently.  </li>
<li>Larger-Cap ones tend to be priced and traded at a smaller discount to their A-shares. However, they are not necessarily those seeing the most significant narrowing in discount. </li>
<li>
<a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-company" target="_blank" data-smartkarma-citation="entities:44279:1" rel="noopener">Foshan Haitian Flavouring &amp; Food Company (3288 HK)</a> may further narrow its discount, while <a href="https://www.smartkarma.com/entities/zhejiang-sanhua-intelligent-controls" target="_blank" data-smartkarma-citation="entities:45277:1" rel="noopener">Zhejiang Sanhua Intelligent Controls (2050 HK)</a> also sees upside from such a perspective. </li>
</ul>


The 6 H-share IPOs of the listed A-share companies YTD have seen their H-A discount narrowing from an average of 31% during IPO to 15.5% currently.  
Larger-Cap ones tend to be priced and traded at a smaller discount to their A-shares. However, they are not necessarily those seeing the most significant narrowing in discount. 

Foshan Haitian Flavouring &amp; Food Company (3288 HK) may further narrow its discount, while Zhejiang Sanhua Intelligent Controls (2050 HK) also sees upside from such a perspective. 


HK Strategy: Trend of Narrowing H-A IPO Discount

<ul>
<li>Performance of China A-share consumer staples stayed lacklustre in the last three months, underperforming benchmark indexes. Negative consumer sentiments have weighted on them. </li>
<li>The pullback in valuations, however, has made them look more appealing now. Excluding <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring &amp; Food (603288 CH)</a>, there has been no earnings downgrades. </li>
<li>Both <a href="https://www.smartkarma.com/entities/shanxi-xinghuacun-fen-wine-factory-co" target="_blank" data-smartkarma-citation="entities:9288:1" rel="noopener">Shanxi Xinghuacun Fen Wine Factory Co (600809 CH)</a> and <a href="https://www.smartkarma.com/entities/anjoy-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Fu Jian Anjoy Foods Group (603345 CH)</a> have pre-announced 1H23 results which showed good 2Q23 earnings.</li>
</ul>


Performance of China A-share consumer staples stayed lacklustre in the last three months, underperforming benchmark indexes. Negative consumer sentiments have weighted on them. 
The pullback in valuations, however, has made them look more appealing now. Excluding Foshan Haitian Flavouring &amp; Food (603288 CH), there has been no earnings downgrades. 
Both Shanxi Xinghuacun Fen Wine Factory Co (600809 CH) and Fu Jian Anjoy Foods Group (603345 CH) have pre-announced 1H23 results which showed good 2Q23 earnings.


China A-Share Consumer Staples: The Most Challenging Time Is Behind

China

Anjoy Foods Group Co. Ltd. operates as a food manufacturer. The Company produces and distributes individually packaged quick freezing seafood, meat, flour, rice, and other processed food products. Anjoy Foods Group mainly conducts businesses in China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Anjoy Foods Group (603345 CH)

Anjoy Foods Group A/H Listing - PHIP Updates and Thoughts on A/H Premium

Anjoy Foods Group (603345 CH), a quick-frozen food company in China, aims to raise around US$300m in its H-share listing. In this note, we talk...

Sumeet Singh

Anjoy Foods Group A/H Listing - A Leader in a Fragmented Industry

Anjoy Food is now said to be pre-markeing for a US$300m Hong Kong H-share listing. We had looked at the company's past performance in our prior note.

Sumeet Singh

HK Strategy: Trend of Narrowing H-A IPO Discount

H-share IPOs of A-shares have seen narrowing discounts, with larger-caps trading at smaller discounts, but not the ones with the largest...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

With the recent IPOs of Foshan Haitian Flavouring and Fujian Anjoy Foods (planned), we think the interest in China's consumer staples sector will...

Osbert Tang, CFA

Anjoy Foods Group A/H Listing - PHIP Updates and Thoughts on A/H Premium

Anjoy Foods Group (603345 CH), a quick-frozen food company in China, aims to raise around US$300m in its H-share listing. In this note, we talk...

Sumeet Singh

Anjoy Foods Group A/H Listing - A Leader in a Fragmented Industry

Anjoy Food is now said to be pre-markeing for a US$300m Hong Kong H-share listing. We had looked at the company's past performance in our prior note.

Sumeet Singh

HK Strategy: Trend of Narrowing H-A IPO Discount

​H-share IPOs of A-shares have seen narrowing discounts, with larger-caps trading at smaller discounts, but not the ones with the largest...

Osbert Tang, CFA

China A-Share Consumer Staples: The Most Challenging Time Is Behind

Negative consumer appetite has affected the performance of Chinese A-share consumer staples. With no significant earnings downgrades for most, the...

Osbert Tang, CFA

H-share IPOs of A-shares have seen narrowing discounts, with larger-caps trading at smaller discounts, but not the ones with the largest...